Made higher high overnight, here is Tuesday NASDAQ trading plan

NASDAQ futures are coming into Tuesday with a slight gap up after an overnight session featuring elevated range and volume. Price popped higher overnight, trading up beyond the weekly high set Sunday evening around 8pm New York. The action saw price tag the naked VPOC from last Monday before coming into a tight balance. At 8:30am retail sales data came out a bit below expectations and more importantly Walmart earnings have the general retailers share off by -1.5% in pre-market trade. At 9:15 industrial production data came in as expected, and as we approach cash open price is hovering right along the Monday high.

Also on the economic calendar today we have business inventories and housing market index at 10am.

Yesterday we printed a normal variation up. The day began with a slight gap down and after an open two-way auction buyers quickly closed the overnight gap. The buying campaign continued higher, trading up and tagging the 12,000 century mark and going about 25 points beyond it before encountering any resistance. Then price checked back to the midpoint, went slightly below it, but buyers ultimately held the mid. Price ramped up into the closing bell and closed along the highs.

Heading into today my primary expectation is for buyers to work up through overnight high 12,096.25 and tag 12,100.

Hypo 2 sellers work into the overnight inventory and close the gap down to 12,025.75. From here sellers continue lower, down through overnight low 11,991.50 before two way trade ensues.

Hypo 3 stronger sellers trade down to 11,946.75 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

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NASDAQ futures are coming into Monday with a slight gap down after an overnight session featuring extreme range and volume. Price spiked Sunday evening when Globex trade opening, sending price up near last Monday’s VPOC before stalling. Price held the highs until about 7am when sellers began actively campaigning price lower. As we approach cash open, price is back inside last Friday’s range, hovering about ten points above the Friday midpoint.

On the economic calendar today we have 3- and 6-month T-bill auctions at 11:30am. Also be aware major U.S. employer and retailer Walmart is set to report earnings Tuesday before the bell.

Last week kicked off with a bit of a morning spike, then we faded lower through Tuesday morning. By late Tuesday morning a responsive bid had stepped in and put a floor in the markets. We gradually rallied higher for the rest of the week, never taking out the high prints set Monday. The last week performance of each major index is shown below:

On Friday the NASDAQ printed a neutral extreme up. The day began with a gap up in ranger that sellers quickly resolved after an open-two way auction. Said sellers continued worki lower, tagging the Thursday naked VPOC before discovering a responsive bid. The morning selling lasted long enough to press the market range extension down, but the rest of the session was controlled by buyers, who reclaimed the midpoint by noon New York and defended a check back around 2:15pm. Then we ramped higher into the close, not exceeding the Thursday high but pressing into a neutral print and closing on the day’s high.

Neutral extreme up.

Heading into today my primary expectation is for sellers to gap-and-go lower. Sellers are active ahead of 11,900 setting up a move down through overnight low 11,851.75. Look for buyers down at 11,815.75 and for two way trade to ensue.

Hypo 2 buyers work into the overnight inventory and close the gap up to 11,946. Buyers tag 12,000 then look for sellers up at 12,056.75 and for two way trade to ensue.

Hypo 3 stronger buyers pres up through overnight high 12,065 and tag the Monday naked VPOC at 12,087.75 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

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My cognitive reservoir is running dry. I used up my best thought yesterday and until I go move something heavy or contort for a few hours, I am afraid all I can muster up is dullard commentary about the militarization of police.

It baffles the mind that these grumpy old white dudes act so tough. And hunt. And muscle their pickup trucks around the roads. Yet they cower behind the proverbial shield of the law dogs like a bunch of bootlickers. All the noise about freedom and liberties while funding an organization designed to control and oppress.

But I have no charisma for it today. In any event, any attempt to apply reasonable logic to the psyche of the extreme right is a sure way to boondoggle the mind.

Models are neutral. Trading will be kept tight and minimal. Little 15 point jabs in the futes. Continue to press all the long term bets on Big Tech.

Raul Santos, November 15th 2020

And now the Strategy Session, enjoy.

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Exodus Strategy Session: 11/16/20 – 11/20/20

I. Executive Summary

Raul’s bias score 3.40, medium bull. No real direction until Tuesday. Watch for Walmart earnings (Tuesday, before-market-open) to put some direction into the tape for the rest of the week.

II. RECAP OF THE ACTION

Big, news driven (vaccine hope) gap up Monday. Steadily faded and erased by early Tuesday. Then a steady choppy rally for the rest of the week. Lagging NASDAQ.

The last week performance of each major index is shown below:

Rotational Report:

Rotations into low quality sectors like Financials and Staples. Tech lagging.

neutral

For the week, the performance of each sector can be seen below:

Concentrated Money Flows:

Industry flows were relatively muted, but skewing towards the positive side of the ledger.

slightly bullish

Here are this week’s results:

III. Exodus ACADEMY

No signals, minimal trading

With neither IndexModel nor Stocklabs generating a directional bias, trades will be kept to a minimal. No pressing. Small scalps, where favorable, only.

Note: The next two sections are auction theory.

What is The Market Trying To Do?

Week ended searching for sellers.

IV. THE WEEK AHEAD

What is The Market Likely To Do from Here?

No real direction until Tuesday. Watch for Walmart earnings (Tuesday, before-market-open) to put some direction into the tape for the rest of the week.

Bias Book:

Here are the bias trades and price levels for this week:

Here are last week’s bias trade results:

Bias Book Performance [11/17/2014-Present]:

Semiconductors form mini balance, Transports top out at range high

Markets fluctuate between two states—balance and discovery.  Discovery is an explosive directional move and can last for months.  In theory, the longer the compression leading up to a break, the more order flow energy to push the discovery phase.

We are monitoring two instruments, the Nasdaq Transportation Index and the PHLX Semiconductor Index.

Transports met resistance at the top of the multi year range. Balance remains.

See below:

Semiconductors could be forming a mini-balance up here, inside a maturing discovery up on the higher time frame.

See below:

V. INDEX MODEL

Bias model is neutral. No bias.

VI. QUOTE OF THE WEEK:

“When a thoughtless or unkind word is spoken, best tune out.” – Ruth Bader Ginsburg

Trade simple, keep the blinders up

 

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Silly I thought it would take lifting the cost of gas up to twenty a gallon to accomplish it. Not a spooky virus. But here we are.

Best Practices and other adaptations being made necessary by the novel corona virus are widening the gulch between the privileged and the not.

A trip to the movie theater has maintained a relatively low barrier since not long after the talkies started gracing screens across the country. According to USA Today, the national average cost of a movie ticket in 2018 was $9.11, marking the first time the average price has eclipsed $9.00. For most of the 1990s, tickets sold for an average of less than $5 apiece, and dating back to the 1960s, many Americans could go to the movies for less than a buck.

The concessions are a shamless gouge, but sneaking in snacks and a drink never required ninja-like instincts. A good time at the movies was accessible by all but the truly desperate. Not any more. Theaters are now being retooled for groups of twenty who can afford to shell out $149 to $349 to see a new release.

These changes amount to what has always been commonplace in the more uppity parts of town—clubs. Places that only allow for like private bowling, or golfing or tennis or swimming or whatever else it is waspy Americans do.

Those heckin’ millenials were doing too much roaming around.

Drifting from one hip city to another, breaking up their freewheeling apartment hopping with three day festivals and Art Basels and backpacking adventures through LatAm. They had to be sequestered to a square of surburban land and made to toil mindlessly on leaves while they reproduce at a rate of 2.7 children per household until the monotony of it all buggered them into the ground.

This fate, of course, applies mostly to anyone falling below the murky upper-middle-class threshold. A shrewd $150k/year earner can still cope with the headache of travel in a pandemic and the cost for reservation of large VRBOs. The pleasure continues for the privileged.

I count myself among the privileged few. My winter docket is nearly booked solid with everything from  RVing around to all the major ski mountains to extended stay in seven bedroom, five bathroom estates boasting instagrammy vistas. Whenever a local dilettante reserves any one of the various pinky up establishments around Detroit for private event, my name is sure to be on the list. We are dead set on living. As for the big scary terrible consequences of catching C19…balls, let that fear rest on some other sap.

What is important, aside from an immense and truthful sense of gratitude for being on the right side of this situation, is to resist the urge to fight these changes being made by our leaders. Going to war for some answer to how to make it affordable for everyone to rent out movie theaters for two hours is not our job.

This is Andrew Yang’s job.

Our job is to extract as many fiat American dollars as possible from the global equity complex. Said dollars are to be converted into mobile command units. Large envoys that can deploy on short notice and access difficult terrain. Self sufficient off shoots from Mothership that boast all the modern comforts of a modern home.

Fighting the prevailing tide is a fool’s effort. Go with the flow. Love thy fate. All that good stoic stuff. Be grateful they haven’t chipped us yet and installed usb drives at the top of our spines. And that the only solid roadblock is between us and Canada.

For now there are two distinct existences crystallizing.

• The W-4 home owner: scrapes out a modest living whilst being indentured to the mortgage banks.
• The tactical capitalists: experiences jaw dropping wealth creation in the financial markets and other less liquid assets. The hoarder, vagabond or otherwise, giving orders to widen the moat and blow the bridges until we can make sense of this microscopic demon.

When will the scientists raise the all clear flag?

We don’t know. As always, we’ll take it one day at a time. Just like alcoholics.

Raul Santos, November 14^th 2020

Comments »

NASDAQ futures are headed into the fourth day of a new President-elect with a slight gap up after an overnight session featuring extreme volume on elevated range. Price was balanced overnight, chopping along the top-side of Wednesday’s midpoint until about 4am when buyers worked price up through the Wednesday high. Since then buyers rejected an attempt back into Wednesday range. At 8:30am CPI data came out softer than expected and jobless claims data slightly better than expectations. As we approach cash open price is hovering just above the Wednesday high.

Also on the economic calendar today we have 4- and 8-week t-bill auctions at 10am then a speech from Fed Chairman Powell at 11:45am. There is also a 30-year bond auction at 1pm.

Yesterday we printed a normal variation up. The day began with a gap up and after buyers held the bid above 11,700 during an open-two way auction buyers stepped in and drove higher, right up to 11,800. Chop ensued for several hours, chopping above the midpoint before a second rotation higher began around 12:15pm New York. We flagged along the highs for the rest of the session, eventually ending near session high.

Heading into today my primary expectation is for sellers to reclaim the Wednesday high 11,910.75 early on and close the gap down to 11,895.75. Sellers continue lower, down through overnight low 11,781.25 before two way trade ensues.

Hypo 2 buyers reject a move back into Wednesday high 11,910.75 setting up a run through overnight high 11,965.50. Look for sellers at 12,00 and for two way trade to ensue.

Hypo 3 stronger buyers rally up to 12,070.25 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

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NASDAQ futures are coming into the third full day of President elect Biden gap up after an overnight session featuring extreme range and volume. Price was balanced overnight, chopping along the Tuesday midpoint until about 3:30am when buyers broke range and proceeded higher. The buyers worked price up through the Tuesday high, and as we approach cash open, price is hovering up near the Tuesday high.

There are no economic events today.

Yesterday we printed a neutral day. The session began with a gap down below the prior three day range. After an open two-way auction sellers stepped in and worked price lower, pressing an early range extension down and taking out last Wednesday’s low by a few points. Then the auction reversed and pressed up through the daily high, going into a neutral print. Buyers could not however close the overnight gap. Instead we reverted back to the daily midpoint and ended the session chopping along it.

Heading into today my primary expectation is for sellers to work into the overnight inventory and tag 11,700. From here buyers step in, take out overnight high 11,785 and tag 11,800 before two way trade ensues.

Hypo 2 buyers gap-and-go higher, trading up through overnight high 11,785 then 11,800 and sustaining trade above it. This set up a run to 11,900 before two way trade ensues.

Hypo 3 sellers work a full gap fill down to 11,624. Look for buyers down at 11,600 and for two way trade to ensue.

Levels:

Volume profiles, gaps and measured moves:

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NASDAQ futures are coming into the second full week after the Presidential election with a big gap down after an overnight session featuring extreme range and volume. Price worked lower overnight, steadily chopping lower for the duration of the Globex session. Around 6am a responsive bid stepped in just a few point below last Wednesday’s low. As we approach cash open, price is hovering in the lower quadrant of last Wednesday’s range.

On the economic calendar today we have JOLTS jobs openings at 10am followed by a 10-year note auction at 1pm.

Yesterday we printed a normal variation down with a liquidation drop at the end. The day began with a gap up to near last week’s high. The open two-way auction formed a wide range before buyers stepped in and worked a bit higher, trading a few points beyond the 09/03 high, briefly tagging the 09/02 range (current all-time high session) before falling back down through the daily midpoint. From then onward action was choppy, chopping below the midpoint before working to a new low of the day in the afternoon. Price was steadily rotating lower until a sharp liquidation move downward took shape during the closing bell. We ended the session near the lows.

Heading into today my primary expectation is for buyers to work into the overnight inventory and not close the overnight gap but close the gap left behind on 11/4 at 11,791.25. Look for sellers to defend 11,800 and for two way trade to ensue.

Hypo 2 stronger buyers trade a full gap fill up to 11,861 then continue higher, trading up through overnight high 11,901.50 before two way trade ensues.

Hypo 3 sellers gap-and-go lower, trading down through overnight low 11,553 on their way to tagging 11,500. This could trigger a liquidation down to 11,300.

Levels:

Volume profiles, gaps and measured moves:

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NASDAQ futures are coming into the first week of the new President on the wings of a COVID vaccine announcement from Pfizer. The news has sent several major indices limit up in pre-market trade while the NASDAQ is up a modest +130. As we approach cash open, price is hovering just below all-time highs.

Also on the economic calendar today we have 3- and 6-month T-bill auctions at 10am followed by a 3-year note auction at 1pm.

Last week kicked off with a gap up. Sellers were active through about 2pm Monday then the rest of the week was a strong rally with breakaway gaps on Tuesday, Wednesday and Thursday. Friday had some early selling but it was eventually reversed and we closed out the weekend on the highs. The last week performance of each major index is shown below:

On Friday the NASDAQ printed a normal variation up. The day began with a gap down and drive lower. The sellers pressed into the gap zone below Thursday’s range before a responsive bid stepped in and returned price back up to the highs. We ended the day near session high.

Heading into today my primary expectation is for buyers to gap-and-go higher, trading up through overnight high 12,408.75 and probing beyond the high water mark 12,446.50. Look for sellers up at 12,500 and for two way trade to ensue.

Hypo 2 sellers press down to 12,200 before two way trade ensues.

Hypo 3 stronger sellers work a full gap fill down to 12,090. Look for buyers down at 12,000 and for two way trade to ensue.

Levels:

Volume profiles, gaps and measured moves:

Comments »

Not talking about having a new President here. There was a change over far more important to my livelihood and that was switching from Exodus to Stocklabs. If you stumbled into this blog expecting more election fodder you can leave now (and hopefully never come back). My stated purpose is to consistently extract as many fiat american dollars out of the global equity complex as I can while blogging about how I do it.

Things you will not find here

• assigning reason to stock market movement
• jokey banter in a New Jersey accent
• pump articles about five lettered tickers
• quick money schemes

If hubris emerges it is usually in the form of vanity or insatiable lust.

Anyhow, the regime change I am coping with is one I have struggled with in the past. New software. The world of active trading does not look kindly onto those who do not adapt though. The death of the pit trader, for example. Therefore I must continue to refine my ability to adapt and reinvent. Never resting on my laurels, no matter how well things are going.

Exodus flagged hybrid oversold on Wednesday, October 28th, nearly nailing the swing low to.the.day.

I did not see it because I transitioned to Stocklabs on the 25th. This type of event can cast doubt on the psyche of a weaker man. Then, in the heat of action, I might feel the urge to close Stocklabs and open Exodus. Then if it has conflicting signals I’m like fuck. My brain gets all its wires crossed and I start losing a sense of direction. Then there suddenly feels like there is no air in the room. There’s no air in here. I can’t breathe. I can’t breathe (RIP George Floyd). Whether these thoughts are real or imagined does not matter. You are not in a position to make objective decisions.

There are various institutions and organizations that seek to make you to feel that way. Why do you think fucking pig cops have those wretched flickering lights and blinding spotlights? They seek to disorient. When we lose our faculties we are easier to control. When layer-after-layer or bureaucracy are heaped upon a project the cognitive load is designed to deter anyone unorganized from making progress. When cable news outlets use trigger words in their headlines and fill the screens with argumentative noise while scrolling more and more information along the bottom and side they seek to evoke a panicked attention.

While there is no organization attempting to control me after I choose to use a new software, I am wrestling with the most powerful sparring partner of all—the man in the mirror. The E-G-O.

I intend to cope how I do best. Unwavering commitment, but more-so like how I commit to lines at the grocery store. The mind can run wild in the grocery queue can it not? The lady two ahead of you drops her paper coupons and they scatter across the floor. Two lines over is just a couple of dudes holding styrofoam clam shells full of prepared food. The cart behind you is fidgedy and right on your heels. They’re a member of the great american religion. The church of anxiety. We either stay in our lane, or if it becomes abundantly clear there is a better option, we make the shift. We do not jump from one line to the other then another then grimace as the line we originally chose flows better.

Well I feel better after writing all of that out. I feel bad for anyone who has even read this far. Enough of that.

The job is to plan and the plan is to trade opening bell on the NASDAQ-100. Work the open gaps in prior day range. Use the IndexModel bias to determine which direction to trade. Write a primary hypo and stick to it unless new information renders it false. Then we have a 50/50 chance of picking the right hypo from 2 or 3. Go for overnight range break and initial balance break only if a valid hypo still exists. Defend the mid if it makes sense.

Never sell the long term investments. Immortal institutions like Tesla and Amazon. Twitter and Square.

Last week alls I did was buy more bitcoin, Twitter and Costco.

There are signs of excess. The market could correct soon. We don’t know when these corrections will happen. The relief comes from knowing that they don’t matter. What does matter? Jack Dorsey. Google. Daddy Elon Musk. Progress in the name of progress and to hell with the old ways.

I’ll end on that note. Be sure to drop by in the morning and cheers to banking coin.

Raul Santos, November 8th, 2020

And now, the Weekly Strategy Session. Enjoy.

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I. Executive Summary

Raul’s bias score 3.5, medium bull*. Markets settle into a calm drift until Thursday morning when Fed Chairman Powell speaks. Expect markets to find direction late in the week after the Fed speak and carry the move into the weekend.

*IndexModel triggered extreme Rose Colored Sunglasses bullish bias. See Section V.

II. RECAP OF THE ACTION

Gap up Monday is faded. Sellers press until late Monday then a strong rally takes hold. A series of breakaway gaps higher carry the rally through end of Thursday. Friday morning sees a sell spike that is consumed by a strong bid which eventually leads to a rally into the weekend.

The last week performance of each major index is shown below:

Rotational Report:

Tech leads the way as we see a strong risk on rotation back into equities after three consecutive weeks of risk off behavior. Utilities and Staples lagging which suggest risk appetite remains strong.

For the week, the performance of each sector can be seen below:

Concentrated Money Flows:

Industry flows skewed heavy bullish after being extremely bearish the week prior. Several semiconductor industry groups up near the top of the list suggest the rally included quality areas and not just garbage like cannabis—which outperformed all other industries last week.

Here are this week’s results:

III. Exodus ACADEMY

Transitioning into acceptance

Last week I observed several fintwit accounts expressing feelings of chaos. Loss of understanding. Disbelief. Types of emotions associated with domicide or some other form of loss. These were mostly Donald Trump supporters. However the market bewildered many a speculator as it rallied hard during the slower than usual presidential election process.

Denial can be a real risky emotion when trading.

Whether that denial continues into next week will likely in a large part be determined by the behavior of Trump. If he denies the legitimacy of the election process, his devote base is likely to do the same.  Eventually, there will be a shift away from denial and into acceptance.

Our job is not to cast judgment on these contextual observations, but merely to do our best to objectively keep them in or perspectival framework while trading.

Note: The next two sections are auction theory.

What is The Market Trying To Do?

Week ended searching for sellers.

IV. THE WEEK AHEAD

What is The Market Likely To Do from Here?

Markets settle into a calm drift until Thursday morning when Fed Chairman Powell speaks. Expect markets to find direction late in the week after the Fed speak and carry the move into the weekend.

Bias Book:

Here are the bias trades and price levels for this week:

Here are last week’s bias trade results:

Bias Book Performance [11/17/2014-Present]:

Semiconductors press into potential support, same for Transports

Markets fluctuate between two states—balance and discovery.  Discovery is an explosive directional move and can last for months.  In theory, the longer the compression leading up to a break, the more order flow energy to push the discovery phase.

We are monitoring two instruments, the Nasdaq Transportation Index and the PHLX Semiconductor Index.

Transports bounced off range low and appear to be compressing. If this compression continues, it will start to build energy. The eventual break could send price out of the larger multi-year balance. This is a lot of “ifs. For now, the call for balance remains.

See below:

Semiconductors found a strong bid down at their support cluster for formed a strong fourth thrust higher. Discovery up continues. The fourth thrust can be tricky. Either this could mark the end of the rally, or be the start of something much bigger.

See below:

V. INDEX MODEL

Bias model is signaling extreme Rose Colored Sunglasses. The signal calls for a calm drift, perhaps with an upward bias.

VI. QUOTE OF THE WEEK:

“Except our own thoughts, there is nothing absolutely in our power.” – Rene Descartes

Trade simple, discipline of the mind, trade the plan

Comments »

NASDAQ futures are coming into the final day of the first week of November gap down after an overnight session featuring extreme range and volume. Price worked lower overnight in a series of three rotations. The first lasted until about 8pm and did not take out Thursday low. The second took out the low by a bit. The third pressed a bit lower, nearly tagging the Wednesday high. At 8:30am non-farm payroll data came out better than expected. As we approach cash open price is hovering along the Thursday low.

There are no other economic events today. Investors are likely watching for more clarity on the final decision on the Presidential election.

Yesterday we printed a neutral extreme up. The day began with a pro gap up, trading up at levels unseen since October 14th. THe range was tight for the first few hours, with sellers making the first move out of initial balance. Buyers controlled the tape from about 12:45pm New York onward though, pressing through the range and going range extension up. After going neutral price worked back to the midpoint. Then we ramped back up and closed near the high during the closing settlement.

Neutral extreme up.

Heading into today my primary expectation is for buyers to work into the overnight inventory and reclaim the Thursday low 11,972.75 then continue higher, closing the gap up at 12,108.50. Look for sellers up at 12,147.50 and for two way trade to ensue.

Hypo 2 sellers reject a move back into Thursday low 11,972.75 setting up a move down through overnight low 11,868.25. Look for buyers down at 11,774.75 and for two way trade to ensue.

Hypo 3 stronger buyers tag 12,200 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

Comments »